BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 1224|
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THIRD READING
Bill No: SB 1224
Author: Correa (D)
Amended: 4/7/14
Vote: 27 - Urgency
NOTE: On April 8, 2014, the Senate Governmental Organization
Committee held an informational hearing on the
tribal-state compact between the State of California and
the Karuk Tribe.
SUBJECT : Tribal gaming: Compact ratification
SOURCE : Karuk Tribe
DIGEST : This bill ratifies the tribal-state gaming compact
(Compact) entered into between the State of California and the
Karuk Tribe, executed on December 4, 2013; provides that, in
deference to tribal sovereignty, certain actions are not deemed
projects for purposes of the California Environmental Quality
Act (CEQA); and stipulates, except as expressly provided, that
none of the provisions shall be construed to exempt a city,
county, or city and county, or the Department of Transportation
(Caltrans) from CEQA requirements.
ANALYSIS :
Existing law:
1. Provides, under the Indian Gaming Regulatory Act (IGRA), for
the negotiation and conclusion of compacts between federally
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recognized Indian tribes and the State for the purpose of
conducting Class III gaming activities on Indian lands within
a State as a means of promoting tribal economic development,
self-sufficiency, and strong tribal governments.
2. Expressly authorizes a number of tribal-state gaming compacts
between the State of California and specified Indian tribes.
3. Authorizes the conduct of Class III gaming activities to the
extent such activities are permitted by state law, a gaming
compact has been concluded by a federally recognized tribe
and the State, and the compact has been approved by the
Secretary of the Interior.
4. Limits the operation of Class III gaming activities to Indian
lands acquired on or before October 17, 1988. Provides for
certain exceptions to conduct gaming activities on Indian
lands acquired after October 17, 1988.
5. Defines Indian lands to mean all lands within the limits of
any Indian reservation, and any lands title to which is
either held in trust by the United States for the benefit of
any Indian tribe, or individual, or held by any Indian tribe
or individual subject to restriction by the U.S. against
alienation and over which an Indian tribe exercises
governmental power.
6. Requires the State to negotiate to conclude a compact in good
faith with an Indian tribe having jurisdiction over the
Indian lands upon which the Class III gaming activity is to
be conducted. Provides the U.S. district courts with
jurisdiction over any cause of action initiated by a tribal
government alleging that the State failed to negotiate in
good faith to conclude a compact. Prescribes the remedy,
mediation supervised by the courts, if it is found that the
State failed to negotiate in good faith to conclude a
compact.
7. Authorizes the Governor, under the California Constitution,
to negotiate and conclude compacts, subject to ratification
by the Legislature.
This bill ratifies the Compact between the State of California
and the Karuk Tribe executed on December 4, 2013, and allows the
operation of up to 1,500 gaming devices (slot machines) at a
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single facility to be constructed on specified tribal trust
property in Yreka, California. The Tribe has lands located in
Siskiyou and Humboldt Counties. The Tribe has agreed to pay the
State its pro rata share of the costs the State incurs for the
performance of its duties under the Compact as well as 10% of
the casino's net win, if it operates more than 350 slot
machines, to be shared with tribes that are not gaming or that
otherwise are not substantially benefiting from gaming. The
Compact includes provisions to protect employees and patrons as
well as measures to protect the environment during the
construction and operation of the gaming facility. Furthermore,
the Compact provides for the regulation of gaming and slot
machines in a manner similar to other compacts entered into by
the State and provides for an annual independent audit and
allows the State to conduct its own audit. Once effective
(legislative ratification and federal approval required), this
Compact will be in full force and effect for state law purposes
until December 31, 2034.
Key Provisions of the Compact
1. Scope of Class III Gaming . Authorizes the Tribe to operate
up to 1,500 slot machines, any banking or percentage card
games, and any devices or games that are authorized under
state law to the California Lottery, provided that the Tribe
will not offer such games through the use of the Internet
unless others in the State are permitted to do so under State
and federal law. The Tribe is not precluded from offering
Class II gaming or off-track horse race wagering at the
facility. Additionally, the Compact does not authorize the
operation of the game known as roulette, whether or not
played with or on a mechanical, electro-mechanical,
electrical, or video device, or cards, or any combination of
such devices, or the operation of any game that incorporates
the physical use of a die or dice.
2. Exclusivity . Provides that, in the event the exclusive right
of Indian tribes to operate Class III gaming in California
pursuant to the California Constitution is lost and other
non-Indian entities are able to engage in Class III gaming,
the Tribe shall have the right to terminate this Compact, in
which case the Tribe will lose the right to operate Class III
gaming authorized by this Compact; or continue under this
Compact.
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3. Special Distribution Fund . Requires the Tribe to pay to the
State on a pro rata basis the actual and reasonable costs the
State incurs for the performance of all its duties under this
Compact, as established by the monies appropriated in the
annual Budget Act for the performance of their duties under
the Class III Gaming Compacts each fiscal year for the
California Gambling Control Commission (CGCC), the Department
of Justice (DOJ), the Office of the Governor and the
Department of Alcohol and Drug Programs, Office of Problem
Gambling, or any agency or agencies the State designates as a
successor to them. The Tribe's pro rata share of the State's
costs in any given year this Compact is in effect shall be
calculated using the following equation: "The maximum number
of slot machines operated in the gaming facility for the
previous fiscal year as determined by the State Gaming
Agency, divided by the maximum number of slot machines
operated by all federally recognized tribes in California
pursuant to tribal-state Class-III gaming compacts during the
previous fiscal year, multiplied by costs, equals the Tribe's
pro rata share."
4. Revenue Sharing Trust Fund (RSTF) . Stipulates that the Tribe
has agreed to pay, on a quarterly basis, into the RSTF or the
Tribal Nation Grant Fund (TNGF), for distribution to
non-gaming and limited-gaming tribes, an amount equal to 10%
of the net-win, as defined, on every slot machine in
operation over 350. The Tribe does not make payments into
the RSTF or the TNGF if it operates 349 or fewer slot
machines. Provides that prior to making its quarterly
payment to the RSTF, the Tribe may deduct $75 per member of
the Tribe per quarter if the total gaming revenue is less
than $20 million. If the deduction exceeds the amount that
will otherwise be due, then the Tribe shall make no payment.
If the total gaming revenue exceeds $21 million in a quarter
but is less than $22 million, the Tribe may deduct $50 per
tribal member. Should the total gaming revenue exceed $22
million in a quarter but is less than $23 million the Tribe
may deduct $25 per member during that quarter.
"Net-Win" is defined as a calculation of the net revenue from
slot machines within the facility. Specifically, it equals
the total amount spent by customers in playing the device,
less winnings paid out, less operating expenses (including
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the portion of the gaming operation's payments to a
third-party wide-area progressive jackpot system provider
that is contributed only to the progressive jackpot amount).
5. Gaming Facility Mitigation and Local Intergovernmental
Agreements . Before the commencement of any activity
occurring on Indian lands, a principal purpose of which is to
serve the gaming activities or gaming operation, and which
may cause either a direct physical change in the
off-reservation environment, or a reasonably foreseeable
indirect physical change in the off-reservation environment
which is attributable to the casino operation, the Tribe must
follow designated procedures, and enter into agreements,
required pursuant to the Compact, to mitigate significant
effects. Specifically, the Tribe is required to enter into
agreements with the following: (a) the County of Siskiyou
and the City of Yreka for law enforcement, fire protection,
emergency medical services and other services provided, and
(b) Caltrans to mitigate all traffic impacts on the State
highway system and for the Tribe to pay their fair share of
cumulative traffic impacts.
Additional Compact Components
Patron Protections (injuries and gambling) . Requires the
Tribe (through its tribal gaming agency) to attempt to
resolve patron disputes within three days of the play or
operation of any game, including refusal to pay to a patron
any alleged winnings from any gaming activities. If the
patron is dissatisfied with the resolution, the dispute shall
be resolved through binding arbitration before a single
arbitrator, who shall be a retired judge, in accordance with
the streamlined arbitration rules and procedures of Judicial
Arbitration and Mediation Services. Also, provides that the
Tribe agrees to waive sovereign immunity in order to be
compelled in federal or state court to abide by the
resolution of arbitration. The Tribe has agreed to maintain
commercial general liability insurance of no less than $10
million per occurrence for bodily injury, property damage,
and personal injury.
Environmental Protections . Requires the Tribe to prepare a
Tribal Environmental Impact Report (TEIR) and negotiate
mitigation of any off-reservation impacts. The Tribe's
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failure to prepare an adequate TEIR when required shall be
deemed a breach of this Compact and furthermore shall be
grounds for issuance of an injunction or other appropriate
equitable relief. A completed TEIR must be filed with the
County, the City, the DOJ, the State Clearinghouse and the
State Gaming Agency. Also, provides for binding arbitration
if an intergovernmental agreement with the County of Siskiyou
and the City of Yreka is not entered into within 75 days of
the submission of the final TEIR.
Employee Protections . Specifies that the Tribe has agreed
to participate in the state's workers' compensation system
and unemployment insurance program and to consent to the
jurisdiction of the state agencies and courts enforcing all
of those standards. The Tribe has also agreed to adopt and
comply with standards no less stringent than federal and
state employment discrimination laws.
Enhanced Audit and Compliance Review Procedures . Allows, in
addition to providing for an annual independent audit, the
State to conduct its own annual audit and compact compliance
review.
Inspection and Testing of Slot Machines . Requires slot
machines to be tested, approved and certified by an
independent gaming test laboratory or state governmental
gaming test laboratory to ensure that they are being operated
according to specified technical standards. Also, requires
the Tribal Gaming Agency to maintain adequate records that
demonstrate compliance with software and hardware
specifications. Authorizes the State Gaming Agency to
annually conduct up to four random inspections of slot
machines in operation to confirm that the slot machines are
operating in conformance with these standards.
Minimum Internal Control Standards (MICS) . Requires the
Tribe to adopt and comply with standards that meet or exceed
the federal National Indian Gaming Commission's (NIGC)
standards. The MICS are incorporated in this Compact as an
appendix (Appendix D), which shall be updated periodically by
the State Gaming Agency and Tribal Gaming Agency, to ensure
the MICS keep up with changing technology and industry
standards.
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Problem Gambling . Requires the Tribal Gaming Agency to
establish a program to mitigate pathological and problem
gaming by implementing measures that train supervisors and
floor employees on identifying and managing problem gambling.
Requires, additionally, the Tribe to include a responsible
gaming message in advertising, provide signage and education
materials at conspicuous locations aimed at preventing
problem gambling, establish self-exclusion and involuntary
exclusion programs, and adopt a code of conduct derived from
the American Gaming Association's code.
Labor Relations . Provides that the gaming activities
authorized by this compact may only commence after the Tribe
has adopted an ordinance identical to the Tribal Labor
Relations Ordinance (TRLO), referenced as Appendix C of the
Compact, and the gaming activities may only continue as long
as the Tribe maintains the ordinance. If the Tribe employs
250 or more persons in a tribal casino facility, then the
provisions of the TLRO become effective. The TLRO provides
for a secret ballot election.
Tobacco and Alcohol Provisions . Provides that the Tribe
agrees to provide a non-smoking area in the gaming facility
and to utilize a ventilation system throughout the gaming
facility that exhausts tobacco smoke to the extent reasonably
feasible and not to offer or sell tobacco to anyone that is
under 18 years of age. Makes it explicit that the purchase,
sale, and service of alcoholic beverages shall be subject to
state law, the Alcoholic Beverage Control Act.
Prohibitions regarding Minors . Requires the Tribe to
prohibit persons under the age of 21 years from being present
in any room or area in which gaming activities are being
conducted unless the person is en route to a nongaming area
of the gaming facility, or is employed at the gaming facility
in a capacity other than as a gaming employee.
Health and Safety Standards . Provides that the Tribe has
agreed to adopt and comply with State public health standards
for food and beverage handling and federal water quality and
safe drinking standards applicable to California.
Building Codes and Fire Safety . Provides that the Tribe has
agreed to meet or exceed the California Building Code and the
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Public Safety Code applicable to Siskiyou County and to
submit to fire safety inspections by the State, and to
rectify deficiencies, lest be subject to court order
prohibiting occupancy of the portion of the gaming facility
with the deficiencies.
Emergency Services Accessibility and Possession of Firearms .
Requires the Tribe to make reasonable provisions for
adequate emergency fire, medical, and related relief and
disaster services for patrons and employees. Also, prohibits
the possession of firearms by any person in the gaming
facility at all times except for federal, state, or local law
enforcement personnel, or tribal law enforcement or security
personnel, as authorized.
Arbitration Rules . Provides that arbitration shall be
conducted before a single arbitrator in accordance with the
Commercial Arbitration Rules of the American Arbitration
Association (Association) and shall be held in the federal
judicial district in which the Tribe's Indian lands are
situated and at a location selected by the arbitrator. Each
side shall initially bear one-half the costs and expenses of
the Association and the arbitrator but the arbitrator shall
award the prevailing party its costs, including the costs of
the Association and the arbitrator; however, the parties
shall bear their own attorney fees. Additionally, for the
purpose of actions or arbitrations brought and the
enforcement of any judgment or award resulting therefrom, the
State and the Tribe expressly waive their right to assert
their sovereign immunity from suit and from enforcement of
any ensuing judgment or arbitral award and to the
arbitrator's jurisdiction and further consent to be sued in
federal or state court.
Effective Date . Provides that this Compact shall not be
effective unless and until it is ratified by the Legislature
and notice of approval or constructive approval is published
in the Federal Register as provided by IGRA. Once effective,
this Compact shall be in full force and effect for state law
purposes until December 31, 2034. Also, if this Compact does
not take effect by July 1, 2014, it shall be deemed null and
void unless the Tribe and the State agree in writing to
extend that date.
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Background
As early as 1852, the Karuk Tribe was a federally recognized
tribe as evidenced by a treaty with the United States and
subsequent government-to-government interactions. However, for
the three decades spanning the late 1940s through the late
1970s, the Tribe lost its government-to-government relationship
with the federal government by virtue of administrative
termination. In 1978, the Department of the Interior undertook
a comprehensive review of the Tribe's situation and a year later
added the Tribe to the list of federally recognized tribes.
The Tribe did not receive equitable or legal title to any
aboriginal or ancestral lands to allow for social and economic
development and, in 1987, began purchasing lands (approximately
200 acres) within Yreka to provide for housing, economic
development and other tribal purposes for its members. Those
lands were subsequently accepted into trust for the Tribe by the
United States Secretary of the Department of the Interior and,
in 2012, the federal NIGC identified the 200 acres held in trust
for the Karuk Tribe as "restored lands" and eligible under IGRA
for gaming purposes.
Today, the Karuk Tribe of California is comprised of three
communities located in Orleans, Happy Camp, and Yreka. As per
the Compact's preamble, the Karuk people are the second largest
tribe in California with approximately 3,700 tribal members
located in one of the most economically depressed regions of the
State.
The Tribe has successfully developed housing divisions, health
clinics and Head Start programs in Orleans, Happy Camp and
Yreka, its three major population centers, and currently employs
over 100 individuals in various administrative, educational,
energy assistance, housing, child welfare, natural resources
and economic development programs.
The Tribe intends to develop its casino project in two phases.
Phase 1 consists of a 36,497 square-foot gaming facility in
Yreka with a 13,800 square-foot gaming floor comprising
approximately 500 gaming machines and eight table games, a
100-seat restaurant, and on-site parking. Phase 2 will add an
80-room hotel, more parking, an additional 20,000 square-feet of
gaming space along with 300 gaming machines and eight table
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games. The project is expected to create 350 jobs in Siskiyou
County which suffers an unemployment rate of over 10%.
The Compact points out that the State recognizes the need for
the Tribe to develop a gaming facility capable of generating
sufficient revenue to service the debt associated with the high
predevelopment and construction costs of the facility. Also,
the Compact notes that the State and the Tribe recognize that
the exclusive rights that the Tribe will enjoy under this
Compact create a unique opportunity for the Tribe to operate a
Class III gaming facility in an economic environment free of
competition from the operation of slot machines and banked card
games on non-Indian lands in California and that this unique
economic environment is of great value to the Tribe.
Additionally, the Compact states, that the Tribe and the State
share an interest in mitigating the off-reservation impacts of
the gaming facility, affording meaningful consumer and employee
protections in connection with the operations of the gaming
facility, fairly regulating the gaming activities conducted at
the gaming facility, and fostering a good-neighbor relationship.
Furthermore, the Compact points out that the Tribe has agreed to
provide to the State, on a government-to-government basis, a
portion of the Tribe's revenues for fair reimbursement of the
cost of regulation and mitigation, for payments to non-gaming
tribes, and for payments to mitigate impacts of the gaming
facility on the local community. The parties also acknowledge
that if the Tribe were required to pay a large share of its
revenues following commencement of gaming activities, then the
positive impact of the Tribe's investment will not be fully
recognized, the Tribe will not materially benefit, and the
gaming facility will not be economically viable.
The preamble states that this Compact will afford the Tribe
primary responsibility over the regulation of its gaming
facility and will enhance the Tribe's economic development and
self-sufficiency. Also, the State and the Tribe have concluded
that this Compact protects the interests of the Tribe and its
members, the surrounding community, and the California public,
and will promote and secure long-term stability, mutual respect
and mutual benefits.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
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Local: No
SUPPORT : (Verified 6/26/14)
Karuk Tribe (source)
UNITE HERE
OPPOSITION : (Verified 6/26/14)
City of Yreka
ARGUMENTS IN SUPPORT : According to the Governor's Office,
"The Compact prohibits the Tribe from commencing construction on
its proposed gaming facility until agreements are in place with
both the City of Yreka and Siskiyou County. The agreements must
address the timely mitigation of any significant effect on the
environment, broadly defined. The Compact requires that the
Tribe have intergovernmental agreements in place with the
locally affected jurisdiction, and in this case, the facility is
actually within the city limits of the City of Yreka. But the
Tribe has agreed, and the Compact requires, that they have an
intergovernmental agreement with both the City and the County -
Siskiyou County. The agreement must address the off-reservation
impacts of the gaming facility, and that agreement must be in
place either through agreement or arbitration before the Tribe
can commence its construction of the facility."
The Karuk Tribe writes that they have "worked continuously for
more than 14 years with a number of gaming and financial experts
to develop a project that will offer new economic opportunities
to both our members and the local population and business
community. Ratification of the Compact allows this to proceed.
The Karuk Tribe has a sincere commitment to enrich the lives of
not just our tribal members, but all residents of Siskiyou
County and the surrounding counties in Northern California. To
that end, we are continuing discussions with Siskiyou County and
the City of Yreka to develop Inter-Governmental Agreements which
ensure that off-reservation impacts of the casino are fully and
fairly addressed. With this said, the Karuk Tribe is
well-positioned to develop a new economic force in Siskiyou
County that will add to the well-being of many. But the entire
project is dependent upon legislative ratification of this
Compact."
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ARGUMENTS IN OPPOSITION : According to the City of Yreka, they
do not believe the Compact is yet ready for legislative action
and they are concerned about the adequacy of the environmental
impact report, specifically regarding wastewater. They are
conducting additional studies on water treatment and supply,
water distribution, wastewater, and traffic. The City states,
"We're making progress, we think, but we really need to complete
this because any impacts that the casino has with 3,000
households, 7,700 people, there just really aren't other ways to
address the cost of those things. We can't shoulder the
economic burdens of this project without it being explicitly in
the intergovernmental affairs agreement." The city and Tribe
are continuing negotiations, but without local agreement they
are still opposed to this bill.
MW:d 6/26/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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